Wednesday, March 30, 2011

Vote National for lower wages, lower business income and higher costs.


This is what they plan to do.

  • The average real wage of the non-supervisory production workers (which comprise 82.4 percent of total private non-farm employees) actually declined by 9 percent between 1975 and 2010.
  • Meanwhile the top 1 percent saw their share of national income rise from 8 percent in 1975 to 23.5 percent in 2005
  • More amazing still, the wage gap between the top 100 CEOs and the average worker jumped from $45 to $1 in 1970 to an unbelievable $1,723 to $1 in 2006
  • Today after the crash, financial incomes are so enormous that in 2010, John Paulson, the top hedge fund manager, earned $2.4 million an HOUR (not a misprint), and his tax rate is less than yours

Sound like New Zealand recently?

Continue the transfer of wealth from working New Zealanders to overseas corporates.

Monday, March 28, 2011

Tax and Welfare reforms. Towards Solutions.


Discussion in the Standard.

70k is the median family income. I agree it is hardly rich. Progressive taxation should start about 140k. Equivalent to 30k, about the level of the top rate in 1980. Cuts to the top rate plus leaving the tax on middle incomes to go up by bracket creep and user pays has resulted in a decreasing disposable income for 80% of New Zealanders.

“The so called reforms in the 80′s and 90′s resulted in a drop in income for the majority, 80%, over the period”
“Since there was little income growth, the net effect of the fiscal changes was to switch income from the poor and those on middle incomes to the rich”.
“Weekly incomes have stagnated since 2008.”
“Incomes for most people, have dropped since the 70′s”.
“Almost constantly apart from a brief slow down of the drop from 2000/2008″.
“For the middle class in skilled jobs it has dropped 40%.”

People are borrowing to live because NZ incomes have dropped below costs..

A better option may be to simplify all welfare, tax and tax rebates into a minimum individual income administered through IRD. With a flat rate up to 200k after that. Those earning over 200K are benefiting the most from our society, so should pay the most towards it.
The difference can be made up with FTT’s, a CGT on all but the family home (up to twice the mean house price) and pigonian capital control taxes.

Sunday, March 20, 2011

Neo-Liberalisms "success" in New Zealand


Since 1984

Neo-Liberalisms "success" in NZ.

 "Between 1985 and 1992, New Zealand's economy grew by 4.7% during the same period in which the average OECD nation grew by 28.2%. From 1984-1993 inflation average 9% per year, New Zealand's credit rating dropped twice, and foreign debt quadrupled. Between 1986 and 1993, the unemployment rate rose from 3.6% to 11%.

The Labour Government in 2000 to 2009 reversed some of the Neo-Liberal policies while keeping within the same general path, leading to their defeat by a disappointed population. Economic and social indicators where rising briefly until  a National Government determined in reinforcing the Union and beneficiary bashing policies was re-elected.. We are now continuing in recession as the rest of the world climbs out.

Social and economic indicators have resumed their downward slide in unison with the other Neo-liberal econom ies, USA and the UK.

Friday, March 18, 2011

Voodoo economics.


 Junk Science and Voodoo economics.

"I'm talking about the acolytes of the 'free market' who have been predicting an 'economic recovery' for many years now.

But, unlike Ken Ring, these promoters of voodoo economics haven't been treated with scorn and derision. No sir. In fact their nonsensical predictions are discussed earnestly in Parliament in the newspapers, on the TV, in the radio, on blogs.

It doesn't seem to matter that they NEVER get it right. It doesn't seem to matter they are promoting economic theories that are junk. But unlike Ring's quackery, the quackery of neoliberalism is treated with reverence, it is ascribed legitimacy"


Thursday, March 17, 2011

The Welfare Crisis


The ongoing plot to starve New Zealanders into submission continues.


Wages and benefits are not dropping fast enough for some people.

Neo-Liberal thought in action. Manufacture a crisis so they can redirect more wealth from ordinary people to them selves.

If-only-those-poor-people-would-stop breeding

"I am revolted by the wealthly, well-educated, well-resourced people who wrote the Welfare Working Group's final report suggesting that all would be well in this country if only the poor people stopped breeding."

The effective way to stop women having lots of kids, as we all well know, is to raise their expectations, possibilities and standard of living.

 Though the problems have been greatly exaggerated by the working group, whose real agenda is cutting tax  for the really wealthy by punishing those their Neo-Liberal meanness has deprived of a future.

On the welfare working group.

"and accept any ‘reasonable’ job offer they get) when their baby is only 13 weeks old. It would be interesting to know which WWG panel members baulked at this proposal. Maybe it was the health specialists, because they realized the danger to the wellbeing of children that this crackpot idea would pose? "

How can there be any real economic benefit to pay to put young children in to childcare while forcing their mothers to work.

Maybe we should limit the children of the wealthy as they will grow up to consume far more than their share of the worlds resources.

Or accept that welfare is part of any functioning society.

The Fight back.


A brief history of post Autistic Economics.

Eventually reality intervenes despite all attempts to ignore it. 

"But eventually reality overtakes time-warp worlds like mainstream economics and the Soviet Union.  The moment and place of the tipping point, however, nearly always takes people by surprise.  In June 2000, a few economics students in Paris circulated a petition calling for the reform of their economics curriculum.  One doubts that any of those students in their wildest dreams anticipated the effect their initiative would have.  Their petition was short, modest and restrained.  Its first part,  “We wish to escape from imaginary worlds”, summarizes what they were protesting against.

Most of us have chosen to study economics so as to acquire a deep understanding of the economic phenomena with which the citizens of today are confronted. But the teaching that is offered, that is to say for the most part neoclassical theory or approaches derived from it, does not generally answer this expectation. Indeed, even when the theory legitimately detaches itself from contingencies in the first instance, it rarely carries out the necessary return to the facts. The empirical side (historical facts, functioning of institutions, study of the behaviors and strategies of the agents . . .) is almost nonexistent. Furthermore, this gap in the teaching, this disregard for concrete realities, poses an enormous problem for those who would like to render themselves useful to economic and social actors.

The students asked instead for a broad spectrum of analytical viewpoints.

Too often the lectures leave no place for reflection. Out of all the approaches to economic questions that exist, generally only one is presented to us. This approach is supposed to explain everything by means of a purely axiomatic process, as if this were THE economic truth. We do not accept this dogmatism. We want a pluralism of approaches, adapted to the complexity of the objects and to the uncertainty surrounding most of the big questions in economics (unemployment, inequalities, the place of financial markets, the advantages and disadvantages of free-trade, globalization, economic development, etc.)"

Monday, March 14, 2011

Another Neo-liberal failure.


The failure of another attempt at privatisation.

"Germany's economy is in good shape because it resisted the fashion of neoliberalism. Europe should show the same defiance in the face of self-serving predictions that the euro is doomed. The financial and debt crises have highlighted the need for strong governments -- and for more Europe, not less". 

Germany has mostly resisted Neo-liberalism so far. Where it has been applied, like the privatisation of their State pensions, it has been as much of a failure as every where else.

Saturday, March 12, 2011

Yeah we should be doing something about those on State welfare.


Yeah we should be doing something about those on State welfare.

Banks and finance companies who fail with Government guarantees. And the insider traders who buy into them knowing they will fail and be bailed out.
Employers who can pay low wages because the state takes up the slack with WFF and childcare allowances.
Poor employers who drive good ones out of business because labour laws are so slack.
State owned companies given away to corporates for cents on the dollar.
External subsidies from ratepayers to dirty Dairy.
Employers given handouts to employ people who then get rid of them when the subsidy ends so they can get someone else who is subsidised.
Employers whose workforce are trained by the State..
Banks getting windfall profits when the OCR is raised.
Currency speculators who short the NZ dollar.
Really wealthy people who use a larger share of the countries resources, but structure their affairs so they do not pay taxes to cover their costs.
Fathers who use trusts to avoid paying child maintenance.
Farmers who have their hands out when they have floods, but do not have any taxable income.
State funded Police protection against people they have disenfranchised.

Politicians who accept an income from the people of NZ, while they sell them, and the country out, to their sponsors from private corporates.

Yep we really do need to cut welfare.

The myth of wealth creation.


The myth of wealth creation.

Despite the mantra that wealthy people create jobs this is not really the case.

Job creators/wealth creators are more often entrepreneurs who created the business and the jobs first and then became wealthy.

The most wealthy people in NZ at present became wealthy by destruction.

Asset stripping, closing businesses and removing capital so they can invest it in much more lucrative financial juggling.
Taxing these sorts of activities more with FTT’s, capital flow restrictions and CGT’s would be a huge benefit to the economy.

The advocates of Neo-liberalism, deregulation and taxing the wealthy less reckoned they would then invest more money into productive business and employment. In fact investment in business dropped 2/3 since 1980, many successful businesses were closed down for short term capital gain and employment in manufacturing and value added exports plummeted.

If the Government was serious about stimulating the economy they would have increased benefits and the minimum wage instead of borrowing to cut taxes to people who mostly spend overseas in luxury goods or paying of loans.

Businesses are shooting themselves in the foot by advocating that their customers be paid less.

People with gumption are leaving the country because there is not enough spare cash in wages and benefits after paying for essentials to buy products from a new business. (That is if their measly wages allow enough earnings to leverage into starting a business and they can get capital from a finance system that earns more in gambling than business investment)

As I can tell you from personal experience there is no point starting new business in a low wage country that cannot afford anything beyond necessities.
Skilled and talented employees are leaving because employers are allowed to use immigration, subsidies like WFF and union busting rules to pay less than the job is worth.  Potential Entrepreneurs  have no spare cash to leverage their own business, even if the demand was there..

Friday, March 11, 2011

"Free Markets".


I do not have a problem with the market. It has proven to be the best option for the supply of most goods and services provided cheating and cases where natural monopolies would exist are properly regulated.

The mix of state and market economies in the European social democracies works very well, as it did in the USA and here until the thieves were given free reign.

The problem is many “free market” advocates actually want them to be free only in the way that benefits them.
Finance markets want no regulation which could limit their casino profits, but government laws and bailouts when required to maximise their profits.
Banks, supermarkets and oil companies want to be “free”; to form cartels and rip everyone else off.
Employers want to be “free” to band together to limit wage rises and raise prices while their work force is banned from withdrawing their Labour or co-operating to ask for reasonable wages. There is no “freedom” to strike in NZ. Sam Purnell would be breaking the law if he “colluded” with other workers to advocate an 8 hour day at present.

You will hear the screams, soon, when builders start asking for more than the inadequate rates tradesmen have been paid recently, to come back from Australia and rebuild Christchurch.

The market will sort out excess rents and pricing in Christchurch over time, but Government help and regulation will be required to kick start the market.

Corporates want to be “free” to operate anywhere with total dis regard for local residents concerns, the environment and community.
They have been allowed far too much power over our Government and society to the extent they now have a Government they totally own.
In other words they are totally happy with the freedom to maximise their profits at the expense of everyone else, while trying to limit our freedoms to live a decent life and have a decent society..

Thursday, March 3, 2011

Stimulus and demand.


Shows that unemployment is due to weak demand.

Unemployment is due to weak demand, not structural.

"Structural unemployment – unemployment stemming from a mismatch of workers' skills and job requirements – has been cited in mainstream media as the main cause of current, high unemployment. Data from the National Federation of Independent Business (NFIB), however, suggest that structural unemployment is not what is ailing the economy. The graph below draws on data from the NFIB's monthly survey from December 2007 (the official start of the recession) to January 2011. Each month, the NFIB asks its sample of small businesses to state the single most important problem facing their business today. Since the recession began,
 respondents overwhelmingly have cited "poor sales," suggesting that today's unemployment is primarily due to a lack of demand. "Quality of labor," the factor most consistent with structural unemployment, barely made the list."

Keynes was right.

"Keynes was right and classical economics wrong. The economist John Maynard Keynes argued that the market has its limits. Most markets work well most of the time, but financial markets left alone are prone to dysfunction, and an economy stuck in a rut can stay in a rut for some time. Thus the necessity of the stimulus".

As we have been saying a low wage economy cannot afford to buy much and tax cuts to high incomes have failed to stimulate demand.

Increases in minimum wages and benefits would benefit small and medium enterprises.

Business are shooting themselves in the foot by asking for a low wage economy and cuts to Government spending.